Verizon Open to Airwave Swap as T-Mobile Seeks More Capacity

Verizon Wireless is the largest U.S. wireless carrier, followed by AT&T Inc. and Sprint Corp. Photographer: Jin Lee/Bloomberg

Dec. 10 (Bloomberg) -- Verizon Wireless said it’s open to
accepting unused airwave licenses as payment for at least part
of the spectrum it’s trying to sell, giving likely bidder T-Mobile US Inc. more flexibility to prepare an offer.

Verizon may consider trading the 700-megahertz, A-block
spectrum to gain capacity in other areas, Verizon Communications
Inc. Chief Executive Officer Lowell McAdam said yesterday in an
interview at the UBS Global Media and Communications conference
in New York. Swaps are a common transaction between carriers
that have a surplus of spectrum in some cities and a need for
more in others.

T-Mobile, the fourth-largest U.S. wireless provider, has
raised more than $3 billion in financing in the past month. The
carrier is interested in lower-band spectrum and considering a
purchase from another company, it said in a filing this month,
telegraphing its interest in the airwaves Verizon is selling. T-Mobile needs more capacity to handle rising demand for data
services from smartphone and tablet users.

“T-Mobile has plenty of cash from their recent
financings,” said Walt Piecyk, an analyst with BTIG LLC in New
York. “That cash can be used to make future spectrum
purchases.”

Bob Varettoni, a spokesman for Verizon, and Anne Marshall,
a spokeswoman for T-Mobile, both declined to comment.

While the A-block airwaves may fit well with T-Mobile’s
holdings, the spectrum doesn’t have the same benefits for
Basking Ridge, New Jersey-based Verizon Wireless, which has
built its network on other frequencies.

“Verizon doesn’t own enough geographic coverage to make
the A-block worthwhile,” said Roger Entner, an analyst with
Recon Analytics in Dedham, Massachusetts.

Channel 51

The A-block airwaves also have interference from television
broadcasts on channel 51, which crosses into the same frequency
in some areas.

“It’s an interesting situation,” Stephenson said in an
interview after his presentation at the UBS conference today.
“They’ve got to get the channel 51 interference cleared to make
it attractive.”

T-Mobile, based in Bellevue, Washington, fell 1.3 percent
to $26.26 the close in New York. Verizon Wireless majority owner
Verizon Communications slid 1 percent to $49.05, and Dallas-based AT&T dropped less than 1 percent to $34.40. Verizon is the
largest U.S. wireless carrier, followed by AT&T and Sprint Corp.